For those of you that don’t know me - cars are my thing. I read Car & Driver Magazine for fun and I care more about a car's engine sound and suspension than I do about luxury. I’ll happily spend less on clothes to be able to drive a sports car - I’m not a normal female. I’m known in my circle of friends as being the “lease queen👑” of sports cars, especially BMWs (read blog here), However, I am shocked to report I finally BOUGHT a sports car. I haven’t bought a car since I was 16 - I’m now 36 - so the majority of my driving life I’ve leased. So, why the change? I stepped into another league with a different car brand…
Meet Roxy.
This is my push present (I delivered twins okay!?… yes, delivered!). She’s a Porsche Macan GTS (turbocharged SUV with an exhaust button). I vowed never to drive a minivan or a huge fluffing tank SUV. So, I found one of the fastest SUVs on the market so I could feel like myself while zipping the kids around town since my small 3 series BMW was not going to cut it. When I ran the numbers to buy vs. lease, I was SHOCKED. Leasing made no sense. The lease payment was almost as much as financing it. Very different than BMWs. This made me stop and reassess. After doing the research, I found Porsche’s retain their value well, unlike BMWs, Mercedes etc., which depreciate very fast and they are ranked in the top with maintenance.
Why I Financed Instead of Buying w/ Cash = Higher Return & Avoided Tax
With how I invest in my brokerage account (more conservative due to future plans and where I would have pulled the cash from) my average return is 7.6% - whereas the interest rate on my auto loan is 3.25%. This interest rate is ridiculously low, so I would much rather have the liquidity and make more while someone else provides me the money to have what I want. Can you say, WINNING!? This is where good vs. bad debt comes in, leverage, and how the wealthy keep getting wealthier…more on that another time. Additionally, I also have gains in my investment account, so if I sold to pay cash for Roxy, then I would pay taxes. No, thank you! Lastly, I tapped into my money behavior. I’m really looking forward to not having a car payment for the first time in almost 20 years. When I have a specific goal, I’m laser focused and dominate it rather quickly, so even though I have 6 years to pay off the car I’m on track to pay it off in 2.5 years. Why did I push the loan out 6 years? I like options. If cash flow was ever tight, I would be on the hook for a lower fixed monthly payment - options, options, options!
So, why am I writing and sharing this? For a multitude of reasons. First, people learn better from personal stories. My hope in sharing my personal financial decisions is that it will help you think and assess yours better. I don’t save every extra dollar I have, nor do I expect my clients to. I believe in balance - live today how you want to *while* saving for tomorrow, that's good financial planning. If you are doing both, you are winning. For me, I meet my savings targets, so I have no guilt when I splurge on the things that matter to me- like my car. But let me be clear, my money has a purpose and I do not waste it. As long as you see value and aren’t over leveraged, saving, and have reserves, then SPLURGE! You work hard and life is about enjoying it.
Disclaimer: Everyone’s financial plan is different and it entirely depends on your personal goals to determine what makes sense for you.
If you want your own Personal CFO (that’s what my clients call me) to help you make the right decisions for your financial situation and goals, schedule a free 30 minute intro call here.
